The New Rules for Becoming an Enterprise Leader

**Alison Beard** (0:01)
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I'm Alison Beard.

**Adi Ignatius** (0:51)
I'm Adi Ignatius, and this is the HBR IdeaCast.

**Alison Beard** (1:02)
Adi, how do you think about the difference between being a great functional leader and a leader that's ready to take on a larger, more enterprise-wide role? What differentiates the two in your mind?

**Adi Ignatius** (1:13)
You know, you could be a great team leader, right? You sort of in charge of your folks, you're trying to maximize what they do. You go to an enterprise role, suddenly it's far more complex. You have to make trade-offs, things that might not favor the team that you worked with. You have to have that holistic sense of what the enterprise needs.

**Alison Beard** (1:32)
Yeah, and because of the pace of change now, all the technological, geopolitical, economic uncertainty, these transitions are getting trickier than ever. Even the best managers need more skills than they did before to make the leap.

**Adi Ignatius** (1:48)
Yeah, look, I think there's a whole skill set you need, and I assume AI fluency is now pretty high up there.

**Alison Beard** (1:53)
Yes, absolutely, among other things. And that's why we wanted to talk to the expert in transitions, Michael Watkins. He's a professor at IMD and best known for his book, The First 90 Days, but he just recently wrote a new HBR article, The 3 Forces That Are Redefining the Transition from Manager to Leader. He's going to explain what's changed and what that means for those aspiring to C-level roles. Here's our conversation.
Before we dig into the practical advice for leaders, I would like to talk about those dynamics that made you want to update your thinking from a decade ago when you first wrote about this functional to enterprise transition. So I guess we have to start with AI, right?

**Michael Watkins** (2:39)
We do because AI is changing everything as we know. Start with the reality that virtually every leader today is working with AI personally, and working with organizations that are using some form of AI, increasingly agentic AI at the same time, right? And so the use of the technology becomes almost indistinguishable from the work the leader does to a degree.
And I think as soon as you realize that that's the case, then the nature of moving up to the enterprise level also changes in important ways, right? Because you have to be prepared to use those tools to make a successful transition.

**Alison Beard** (3:14)
And then the second force that you cite is geopolitical turbulence. Why is that having an impact on broader swathes of companies and leaders than it did in the past?

**Michael Watkins** (3:26)
I think for a long time, the geopolitical environment was kind of relatively static and wasn't a high level driving factor for what leaders at the top needed to do. And obviously, that's just completely been blown up by all of what's happening. It started, I think, really with the Ukraine War, which has been going on for a while, but it's only accelerating.
And between tensions between trading blocks, China, US, Europe kind of caught in the middle of it all with additional conflict erupting in the Middle East, leaders now have to be treating geopolitics as a primary focal point, right? And they need to be thinking about how to orient their businesses to deal with likely geopolitical turbulence.

**Alison Beard** (4:10)
Yeah. And I feel like that almost started during COVID with supply chain disruptions, right? It was like the first time that you were hearing stories about companies that you always thought of as being pretty much domestic, being really adversely affected because they couldn't get parts or products.

**Michael Watkins** (4:27)
100%.

**Alison Beard** (4:28)
And then finally, the third force is compressed leadership pipeline. So what do you mean by that? Why is it happening? And what's the impact on managers who have higher level aspirations?

**Michael Watkins** (4:41)
So this is also connected to the technology and AI piece, right? And more generally, you know, all the work that's being done and has been done to flatten organizations out to embed digital technologies. And what that basically means is there, and it's a good thing, Alison, right? Fewer levels of leadership through which decision-making needs to flow. But it also means that there's less opportunity career wise for leaders to really prepare themselves for those very senior positions.